SHEFFIELD (HOUSING INVESTMENT PROGRAMME) (Hansard, 21 May 1980)

§ Mr. Frank Hooley (Sheffield, Heeley)

In the first year of office of the Labour Government of 1974 to 1975, public expenditure on housing, at 1979 prices, was just over £7 billion. In the current financial year, that has been reduced to £4.7 billion. By 1983–84, public expenditure on housing will have been slashed to £2.8 billion.

It is little wonder, then, that the Association of Metropolitan Authorities recently wrote a letter stating: Housing has been cancelled for the next three years. Those global figures do not make much impact on most folk until they are translated into what is happening at the grass roots level in towns and cities. I shall, therefore, refer to the position of Sheffield. The housing investment programme covers not only council house building but also slum clearance, council house modernisation, improvement grants, home insulation grants, mortgages, general improvement areas, housing action areas, acquisition of land, professional fees and many smaller, technical matters that must be met from the local allocation.

The allocation for Sheffield in 1980–81 is £21,185,000. Last year, the city spent £24.5 million. Allowing for inflation, that is equivalent in 1980 to about £28 million. In real terms, there has been a cut of 25 per cent. in the HIP. As Sheffield is a dynamic and go-ahead housing authority, it asked for £44 million. It has, therefore, suffered a cut of 50 per cent. If the figure of £24.5 million is adjusted for a rate of inflation of about 21 per cent.—it may be higher than that later in the year—it represents a cut of 25 per cent. That is serious.

What is the effect of those cuts on the building programme? I shall consider what Sheffield hopes to do this year and what it will be able to do on its reduced allocation. Virtually all the money will be swallowed up by existing commitments. There are a fair number of houses under construction and in the pipeline. Those 681 houses have to be financed. Sheffield had hoped to start nearly 900 new homes in 1981. This has had to be cut to 100 because only £533,000 is available for new stocks.

Of course, that will have a considerable impact on the housing problems of Sheffield. It will delay tackling the formidable difficulty of providing specially designed new flats, homes and sheltered accommodation for the elderly. The problem of housing the elderly is growing in Sheffield as it is in the country generally. Incidentally, this has a "knock on" effect, because it is not possible to move elderly folk from the unsuitable housing that they now occupy and provide them with specially designed flats. The pressure is then put on the geriatric services and the geriatric wards of hospitals, and this is an extremely expensive way of caring for the elderly. The pressure on public funds may be more than it would have been had there been a reasonable allocation for new buildings in the first place.

There are also the consequences for employment. The Sheffield housing chairman has quoted figures of between 1,000 and 2,000 people who have been made unemployed as a consequence of the reduction in the housing programme. By no means all these are local authority employed. Private contractors are given a fair opportunity to take part in the housing programme in Sheffield, and about 350 workers in various categories and grades could be without work as a result of the ferocious reductions in the new building programme in the current financial year.

Then there is the problem of modernisation. Sheffield has an excellent record of council house building and there are many magnificent estates. In my constituency, the Gleadless Valley estate is widely acclaimed as the finest in Europe. Estates built in the late 1920s and early 1930s are now 50 years old, and even the post-war estates are 25 to 30 years old. At the time they were built, they were clearly outstanding and of much higher quality than the slums and derelict properties that they replaced. But naturally, as a result of the passage of time, they have fallen behind what people expect in the last two decades of the twentieth century.

Thus, a programme of modernisation is necessary and desirable, and Sheffield 682 has set a target of 2,000 homes a year for modernisation. However, owing to the cuts in the housing investment programme in the current year, a programme to modernise 1,200 pre-war homes has been cut to 800 and a programme for 400 post-war houses has been abandoned altogether. Therefore, 800 families who might reasonably have expected their homes to be modernised this year will be disappointed. If national figures go the way that the public expenditure White Paper has indicated, that disappointment may extend over many years.

The problem does not apply only to the public sector. In Sheffield there are about 53,000 pre-1919 houses. These need improving and modernising even more than some of the older council estates. Of the current allocation, £1,250,000 will be taken up by improvement grants that are already firmly promised, which leaves very little money for new commitments to improvement grants for residents in privately rented houses. It was hoped that there would be 1,000 new improvements during the current financial year. That number will now have to be drastically cut back. Like the council tenants who have been hoping to have their dwellings modernised, many families in privately rented older houses, some dating back to before the First World War, will be disappointed. As the housing programme is progressively cut year after year by the Government, that disappointment will extend further into the uncertain future.

The same problem arises with regard to mortgages and loans for improvements. Sheffield has been giving about 15 mortgages a week over the past year or so and hoped to increase that figure to 20 a week. People who would have otherwise not had the opportunity would thereby have been able to own their own homes. I believed that home ownership was a key feature of this Government's housing programme. However, the chairman of the housing committee estimates that loans will drop to only one a week under the housing investment programme.

Perhaps the most astonishing feature of the allocation is with regard to energy saving. The Government announced not long ago that the scheme of insulation would be extended to public sector housing. Insulation saves the home owner 683 or occupier money and saves the nation fuel. Having announced their generosity, the Government then cut the money available to Sheffield—and doubtless other authorities have suffered similarly—from £300,000 to £145,000 in the current year, which is a reduction of over 50 per cent.

Sheffield had ambitious schemes for energy conservation and planned to spend about £600,000 in the current year on that aspect of housing policy. It is now likely to have a miserable £20,000 for that programme. It had planned loft insulation schemes for 2,800 houses and other schemes for electrically heated maisonette and high tower blocks. Those schemes have more or less to be abandoned because the financial resources will not be available.

The Government have taken deliberate action to force up the price of gas and electricity way beyond what is required to cover the revenue accounts of those nationalised industries. They have a deliberate policy of recouping from these public corporations large sums of money that will go to the Treasury. It could be argued that that is one way of urging the need for conservation. However, those on low incomes, and particularly old people, are put under enormous pressure because of fuel bills. The Government then, through cuts in authorised expenditure on housing, force authorities such as Sheffield drastically to reduce or abandon ambitious, far-reaching and sensible plans for insulation to cope with the special problems of all-electric blocks built 10, 15 or 20 years ago—long before the oil crisis.

By any standards, this is sheer economic lunacy. This is a severe cutback in what Sheffield hoped for and asked for in its housing programme. Even if the Minister says that Sheffield's claim for £44 million was beyond what was reasonable, we are still faced with the fact that, whereas last year Sheffield expended £24½ million—about £28 million at current prices—that amount is being cut by one-quarter. The severe cutback in new housing puts jobs at risk and postpones the day when many people can expect a decent, suitable home. There will be long waiting lists and more people will be dumped in the geriatric wards of hospitals.

684 The cut in modernisation and improvement will reduce the council's ability to deal with the substantial problems of modernisation and disrepair. The cut in mortgage funds will affect those at the lower end of the housing market.

I conclude with a plea to the Minister. It may be that other authorities in the country, not as ambitious, vigorous and dynamic as Sheffield in housing, will find that their housing investment programmes are more than they require, by perhaps £1 million here or there. If that is so, I hope that it will be possible, within the fixed total of housing expenditure, for a reallocation of that money to be made to deal with some of the problems of modernisation, energy conservation and new building which now face Sheffield as a result of financial constraints.

§ The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg)

I was interested to hear the points put by the hon. Member for Sheffield, Heeley (Mr. Hooley) about the problems Sheffield is experiencing. He has put the case, as put to him by his local authority, very fully.

It is necessary for me to make crystal clear one thing about HIP allocations which is all too often forgotten. They have nothing to do with subsidy, grant or aid. They are concerned strictly with resources. So, given the level of resources available, it is the means of dividing the national total between the 367 individual housing authorities that we have to look at. An authority's HIP allocation is the amount it may spend on housing investment in a given year.

The determination of these allocations is carried out in two stages. First, there is the national total which is divided between the regions. The regional allocations are then, in turn, shared out between the individual authorities. At both stages, account is taken of a number of factors, including evidence of housing needs, as set out in HIP applications. In addition, special attention is paid to the specific needs of certain inner city areas, Sheffield being one of these. We look at the size of authorities' bids for resources and authorities' estimates of the extent to which expenditure for the following year is already likely to be committed by the time the allocation is received.

685 Regional offices of the Department also take into account the policies proposed by an authority in its local housing strategy, the relationship of these to national policies and the extent to which the authority has made use of the alloca-cations given it in previous years. I shall return to that in a moment. In making allocations for 1980–81, we took what account we could of authorities' existing commitments, on the basis of the estimates supplied to us by the authorities with their HIP returns.

I believe on that basis that the allocations both to the Yorkshire and Humber-side region as a whole, which, in fact, received a slightly greater proportion of the national total than in 1979–80, and to Sheffield in particular were as fair as we could make them. We also noted that Sheffield was unable to spend about 20 per cent., or £7 million, of its provisional 1979–80 allocation.

Having set the scene generally, I turn to the particular case of Sheffield, which, I am told, now says that existing commitments on their own are almost as much as the total sum it will be allowed to spend in 1980–81. This must be because the current estimate of commitments is substantially in excess of the figure the council gave my Department in September 1979. The commitment figure conveyed to us by the city of Sheffield at that time was £10,225,000, which was very much less than the 1980–81 allocation of about £21 million, plus £145,000 for the homes insulation scheme.

Sheffield now says that its commitment figure is in excess of £20 million, an amazing 100 per cent. leap upwards in a short period of time, with no explanation, and that, due to its high commitment figure, the allocation allows insufficient flexibility to implement any of the objectives given in the letter conveying the 1980–81 HIP allocations, which we sent to all authorities on 21 February.

Under the one-block system which we introduced for 1980–81, local authorities are given more freedom to decide what investment will best suit their areas. I made it clear that it is Sheffield's choice whether it spends its allocation on improvements, modernisation or new house building.

Apart from that factor, Sheffield in any case is not the only authority which, for 686 one reason or another, believes that its allocation will be insufficient. I must make clear that there is no prospect of help of any kind. There are no additional funds in reserve for 1980–81, and the entirety of the available resources has already been distributed. I make the point however, that the more council houses and flats Sheffield sells, the more capital receipts it will have to supplement its HIP in 1981–82 and onwards.

Where does Sheffield city council go from here? I am afraid that it will have to face up to the realities of the statement of my right hon. Friend the Secretary of State to the House on 21 February in which he said that the Government were faced with the task of setting public expenditure at levels which the nation could afford. This means that Sheffield will have to adapt to the reduced provision for public expenditure overall arising from the Government's review and the new spending priorities within that provision. This will inevitably mean that authorities such as Sheffield will be unable to proceed with some planned schemes. The Government's present policy is to concentrate the public sector effort on meeting particular local needs such as for the elderly and the handicapped and to make better use of existing stock. The encouragement of home ownership and the private rented sector are important features of the policy.

But, in reassessing its programme and priorities within the new allocation for 1980–81, and the likely level for the following years, there is much that Sheffield can do to help itself if it wants. My hon. Friend the Minister for Housing and Construction made a comprehensive statement in his address to the Institute of Housing seminar on 24 April, a copy of which has been sent to Sheffield's housing department. In that, he not only set out initiatives that local authorities could take in further promoting low-cost home ownership but also explained that by so doing they would incur only small or, in some cases, a nil call on their HIP allocations.

The seven-point home ownership programme that we are asking local authorities to consider in the light of the Housing Bill is quite simple. The first is the selling of council houses to sitting tenants. The second is the selling of local authority-owned land to private builders 687 with planning permission for starter home schemes. The third is the building of starter homes for sale on local authority land in partnership with private builders. The fourth is the improving of homes for sale. The fifth is the selling of unimproved homes for improvement by the purchaser. The sixth is the offering of shared ownership as an alternative to outright sales wherever possible. The seventh is using the new local authority mortgage guarantee powers to facilitate down market lending by building societies.

The capital receipts arising from a number of the seven points which I have just set out and which will augment a council's HIP allocation for 1981–82 onwards would allow Sheffield city council to get the maximum housing value from the available public expenditure.

I have to say to the hon. Gentleman that I am not at all certain that Sheffield has yet realised how it will have to proceed if it is to act in the interests of its tenants and those on its waiting list. I can do no better than repeat my compliments to the hon. Gentleman on the clear way in which he put the case which Sheffield has put to him. It is a case which I think has holes in it, because he made the point about drawing a percentage reduction from Sheffield's 688 bid as opposed to the allocation. That is a rather difficult argument to sustain when Sheffield had a £7 million underspend on its previous year's allocation. So it would give one not very much confidence that it could achieve the actual bid it put in.

I say to the hon. Member and to the House that it really is time that Sheffield began to face up to the realities of the situation and took an objective look at its programme and policies, bearing in mind the wide variety of options which are open to the council and which I have set out very clearly following the speech by my hon. Friend a few weeks ago. It really is time that Sheffield stopped living in a political dream world of its own and began to live in the real world. That then would be, perhaps, more in keeping with the interests of its ratepayers, its tenants, those on its waiting list and the nation. That is what Sheffield could do to help itself, and I am sure that as a very faithful representative of his constituents and their interests the hon. Gentleman will convey those points to Sheffield. I hope that it will learn from them.